SAP ERP

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I have made this Research Papers for the viewer who works on SAP ERP or studying the same site. This papers include the Importance of Financial and Managerial Accounting in SAP ERP. This include the SOX act and some successive & failure story of companies who implement ERP

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SAP ERP

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I have made this Research Papers for the viewer who works on SAP ERP or studying the same site. This papers include the Importance of Financial and Managerial Accounting in SAP ERP. This include the SOX act and some successive & failure story of companies who implement ERP

INDIA ASSIGNMENT

Abstract:

2011

This study determine about the main two functionality of Accounting i.e. Financial and Managerial Accounting, and how this two activities take place in SAP software. Financial and Managerial accounting have many different activities related to SAP software. I have also mentioned some of these activities. I have tried my level best to make this paper effective so that it covers all the important part of the given study.

Introduction:In this case study I have explained the Financial and Managerial Accounting and its different activities that are used in SAP ERP. The important part of this study is SOX act i.e. Sarbane-Oxley Act. This act makes the changes in the current SAP software. I have tried to describe this change with the help of some case studies, article and research available in the Google. As we all know there are many stories related with SAP ERP failure and about its success, I have searched those company and mention their stories in this paper.

Classification of Financial and Management Accounting throw their activities and diagram: Financial Accounting:If we want to understand the Financial Accounting then we have to understand its flow in the organization, that how financial accounting leads the financial part of the organization. We have to understand the fact that financial accounting measures money as an economic performance but not as a factor of production.As I said above that to understand the financial accounting we have to understand its flow, because financial accounting has its own flow to drive its features in the organization. So the financial accounting include all the In and Out flows of transaction that take place in the organization. The main task of the financial accounting is to include all controls of money in the organization as revenues, expenses, liabilities and assets. Now here the question arise that what financial accounting gives us? And how its beneficial to us? So with reference this question I want to said that financial accounting collects and then summarizes all the financial transaction that take place in the whole year, and prepare the financial report of the organization such as balance sheet which every company release in the fiscal year and also lenders, tax authorities, investors and other stakeholders Here is the flow or we can say the cycle of financial accounting from which we will able to understand the work or flow of the financial accounting (fig.1.0)

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Management Accounting:Now the second term of accounting which we are going to discuss is Management accounting. It is totally opposite of what we have discussed in financial accounting. In financial accounting the report are generate for external stakeholders where as in management accounting the reports are generated are required by the manager to make daily, long term or short term decisions. From that we are able to know that management accounting is used to generate (internal report) daily, monthly or weekly report for the company or for the organization. With the word internal report I want to say that this report show the internal statement of the organization such as sales revenue report, order in hand, all type of inventories and also amount payable and amount receivable. With the report that management accounting generates it also gives the information related to different analysis and statistics. The following fig. show process focused in management accounting. (fig. 1.1)ROHINEESH R.BHARDWAJ s3903852

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From the following fig. we can understand the flow of working for both financial and for management accounting. (fig.2.0) Classifying of Financial and Management Accounting throw figure:

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Our SAP software has some features to manage:Credit Management currency translation, Intercompany transactions, And provide reports using different languages. 1. Credit management throw SAP software: Credit management means selling the product to the customer and then receiving money later from them. The customers credit worthiness determines the credit that the company gives to the customer. The company decides the mode of payment which will determine the number of credit days. Based on historical data, SAP Credit Management does the credit rating of the customer and also sets the credit limit for each customer. Thus SAP can centralize credit management system, using both internal and external credit information. There are the three transition codes that you can used for releasing the SAP credit management bloc:ROHINEESH R.BHARDWAJ s3903852 Page 4

INDIA ASSIGNMENTVKM3-sales order VKM5-Delivery order VKM4-both sales order and delivery order (October 23, 2007 jiteshdua)

2011

Currency translation Currency translation allows you to translate key figures with currency field that are present at the Info Provider level with different currencies to a specific currency on the fly while executing the report. It can also be used in transformation rules to translate the amount key figures with different currencies to a standard currency while loading the data into BW data targets. The document explains the step by step procedure to implement the currency translation scenario (Patni Computer Systems Ltd Article 13 February 2009)

Following is the fig. from which we can better understand the currency translation (fig 3.0)

SAP Provide different languages to generate report

As in currency translation the same phenomena is in this term, because any organization which need currency translation in their organization also need different language to generate their report. As this is not compulsory that if we generate ourROHINEESH R.BHARDWAJ s3903852 Page 5

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report in one language is acceptable by all other companies where we do business. For example if our business globally extends to China and we generate some report of our company in English is understandable or acceptable by Chinas company, because it may happen that they do there all transaction in Chines or they generate all their reports in Chines. So to solve this problem there is one feature which SAP ERP have added in there system so that we can able to generate the report or can do the transaction in our desired language.For example: We can use the transaction code :->

SE63.

This code is used to change the language in ABAP as if we dont want to generate our report code in English we can change it to any other language

There are also some other features of SAP which I have researched such as: Talent Management: SAP recently announced the general availability of SAP ERP HCM succession Management enhancement package 5. The SAP Talent Visualization application by Naksia (3.0) was released last year, for compatibility with enhancement package 5. Learn about the changes that have been made, as well as the new functionalities and enhancements that are available in HCM Talent Management enhancement package 5 and Nakisa 3.0 (Venki Krishnamoorthy, SAP (America), October 14, 2011)

The Sarbanes-Oxley Act

The Sarbanes Oxley Act will bring the most far reaching reforms of American business practices since the time of Franklin Delano Roosevelt said President George W Bush, while signing of the Sarbanes-Oxley Act of 2002. In July 2002, the United States Congress passed the Sarbanes- Oxley Act (the Act/SOX) into law. The Act was primarily designed to restore investor confidence following well-publicized bankruptcies that brought chief executives, audit committees, and the independent auditors under heavy scrutiny. The Act is applicable to all publicly registered companies under the jurisdiction of the Securities and Exchange Commission (SEC). SOX is a far reaching legislation, effecting significant changes to laws affecting officers, directors and reporting obligations of public companies, and mandating a myriad of new regulations to prevent securities fraud and other abuses. The Sarbanes Oxley Act called for the formation of a Public Company Accounting Oversight Board (PCAOB) and specified several requirements (sections) that include managements quarterly certification of the financial results (Section 302) and managements annual assertion that internalROHINEESH R.BHARDWAJ s3903852 Page 6

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controls over financial reporting are effective (Section 404) among others.The Act has largely ignored the differences in practices and corporate governance regimes between the United States and other countries, and has extended the reach of the United States laws to many aspects of the internal affairs and governance regimes of foreign companies and their auditors. There are of course certain reliefs for Foreign Private Issuers (FPI) in the act.(Theme, May,2005)

Implications for BPO Industry in India

The Business Process Outsourcing (BPO) industry is witnessing tremendous growth. According to NASSCOM, the Financial Services is poised for tremendous growth. Indian BPO Industry is going up the value chain. India is expecting huge growth in the Finance, Accounting, Payroll, Accounts Payable and other financial processes to move to India from US business houses. (Theme, May 2005)

The initial phase of the deployment was to enable the existing SAP ERP as part of its transactional platform to have an interface with the several banks in real time basis. ASPL identified three banks including Kotak Bank, Axis Bank and HDFC Bank for initial integration purpose and mapped its entire business processes for data and document exchange to port on a common solution on SAP Process Integration. (N Geetha) Challenges: There were many challenges in the project such as it was very difficult to manage the internal and external stakeholders. The second problem was the late delivery schedules, the dispatching of product was very much time consuming and the third challenge against the ASPL was to handle the legal document, it was becoming very tough to deal with this problems. Success factors Commitment from the senior management, emphasis on user training, hand-holding the users to do the transactions, publishing a common issue log on a daily basis and information availability in real time to the teams. ( N Geetha)

Avenue Super Marts Pvt Ltd., (ASPL)

Industry Partner Kick off of the Project Cost Solution

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owns and operates hypermarkets and supermarkets by the store name D-Mart. Seal Infotech, a SAP partner Started in December 2009 and it took 11 weeks to go live. One Crore Rupees SAP Net Weaver Process Integration (SAP PI).

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2. Tata Ryerson: Tata Ryerson upgrades SAP to handle growth. The company implements its SAPs ERP package in the year 1997. The main reason to implement this expensive package is to handle the companys growth, maintain the quality and to do just-in-time supplies. So being an unorganized sector the only way to maintain in the market for longer time is to give the different services, give the better quality and product and maintain the CRM that is Customer Relationship Management. This all can be maintain by SAPs different functionality. Upgrade the system: From the past seven year the Tata Ryerson has upgrade its ERP package twice. This helps the company to get its target in time and also to meet their business requirement. Result: As a result the companys requirement increase tremendously from Rs 10 crore in 1999 to Rs 335 crore in 2004.

IT infrastructure at Tata Ryerson

Industry Steel: Hot & cold-rolled steel coils, strips, plates and sheets. The production server is a HP ML570 with a Pentium III Xeon processor, a 240 GB hard disk and 2.4 GB of memory. The quality and development server is a HP DL380 with a 120 GB hard disk and 2 GB memory. SAP R/3 3.0F upgraded to R/3 4.0B and later to R/3 4.7. Windows 2000 Oracle 9i Tata Technologies, Pune The ERP package (R/3 3.0F version) cost Rs 3 crore to implement. The upgrade to version R/3 4.0B cost Rs 2.5 lakh as there was no change in the hardware infrastructure. The later upgrade to R/3 4.7 enterprise version cost Rs 45 lakh as the entire hardware infrastructure was also replaced. (Source :Tata Ryerson)

Hardware

Software Operating System Database Implementation partner

Cost

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3. Gujarat Reclaim and Rubber Product Ltd.

Gujarat Reclaim and Rubber Products Ltd. (GRRP) has become the first company in the reclaimed rubber industry in Asia to deploy my SAP ERP. The company has always considered itself a torch-bearer in technology usage and it wanted to set a standard in the industry through this implementation. The focus during this project was to ensure that the company was able to speedily demonstrate the value of ERP to the rest of the industry through a combination of process innovation, improved productivity and enhanced revenues or profitability. (Megha Banduni, http://www.expresscomputeronline.com/20070212/management01.shtml). The company has started its implementation in the month of January in 2005 and was completed in Aug 2006. The project was completed in two phases. First phase was implemented at their Mumbai branch and Ankleshwar and Solapur factory. The second phase was rolled out at its Panoli facilities. Result: Accuracy and flexibility within eight months of moving to the new system, Gujarat Reclaim is seeing significant payoffs by adapting to the best practices laid down by the ERP system. Some critical business benefits include accurate delivery dates for products, flexible pricing, a fourfold increase in the manufacturing planning horizon, and support for local business requirements in different geographies across the globe (Megha Banduni)

3 Failure stories.1. Dudhsagar Dairy, MehsanaMehsana-based Dudhsagar Dairy, the largest co-operative dairy in India, which manufactures milk products under the Amul and Sagar brands, has become the first dairy co-operative in the country to implement enterprise resource planning SAP ERP solutions across its establishments.

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The project was completed in just eleven months considering the complexity of legacy systems, the typical milk collection and billing system and multi-locational business units. SAP ERP solutions package was implemented in 11 months from August 4, 2003 to July 2, 2004,(Meghdoot Sharon / Ahmedabad March 04, 2005) Reason of failure of SAP ERP solution Dairy was unable to streamline business processes. The employers were unable to take quick decision Unavailability of accurate, timely and uniform information. Lack of in-house training. Unable to match-up with new system Unawareness of system upgrading Lack of educated and smart employees

2. ERP implementation failure at HP

About the Company Founded in 1938 by Bill Hewlett and David Packard as an electronic instruments company The customers were engineers and scientists. HP launched its first minicomputers in1974, first Personal Computer in 1981,HP was second largest computer manufacture in 2001(hp-presentation.pdf,2010) Reason for implementing ERP SAP. The 90s: SAP R/3 Shorter lead and delivery time A global distribution system Cost saving (hp-presentation.pdf,2010) Reason of failure. Project Team Constitution Data Integration Problems Demand Forecasting Fore casting Problems Poor Planning and Improper Testing Inadequate Implementation Support/Training (hp-presentation.pdf,2010)

3. The biggest failure till date was of Marin County.

Marin CountyMarin County bought SAP software in 2005 and engaged Deloitte Consulting to perform the implementation. After spending almost $30 million dollars the county abandoned theROHINEESH R.BHARDWAJ s3903852 Page 11

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effort, citing problems and deficiencies, and initiated a lawsuit against Deloitte.( Michael Krigsman on March 31, 2011)

ConclusionThe overview or the conclusion of the above papers and from the researched that I have done to complete this papers is that Accounting plays a very important role in the organization. From the success and failure stories I learned a lot about what we have to do before & after implementing SAP ERP or any other ERP. This paper also tells us that about the SOX act, its implication. And what are the changes that take place in the current SAP ERP after this Act take place. WORD COUNT 2,618 BIBLIOGRAPHY: 1. Definition of Management Accounting, viewed 15 December 2011 http://college.cengage.com/accounting/ansari/management/1e/students/modules/mod1 1.pdf 2. Classification of Management Accounting. ,viewed 15 December 2011 http://www.businessdictionary.com/definition/management-accounting.html

6. Second successive story on Tata Ryerson, viewed 16 December 2011 http://www.expresscomputeronline.com/20040712/ebusiness01.shtml

7. Third successive story on Gujarat Reclaim and Rubber Products Ltd. (GRRP), viewed 16 December 2011 http://www.expresscomputeronline.com/20070212/management01.shtml 8. First failure story on Dudhsagar dairy, viewed 16 December 2011